I’m not a big fan of the consumer staples. Due to higher inflation, higher interest rates, consumer staples get hit because they use and convert raw materials into a finished good that you and I use as consumer. As a result, their input costs go up, directly affecting their top line sales. In addition, the consumer staples companies can’t pass on their higher cost to us in fear of losing more business.
Kraft Heinz Co shares fell to their record low after the food giant announced a multi-billion dollar write-down due to eroding value of its Kraft and Oscar Mayer products during their earnings announcement on Thursday.
The announcement put the spotlight on Kraft’s stagnating growth and the changing tastes of consumers, who have been shunning older, established brands for newer hipper products, cheaper private label brands and non-processed food.
Kraft also hit investors with the announcement of a regulatory probe, a chop in its dividend and a quarterly loss on Thursday.
Warren Buffett’s Berkshire Hathaway lost more than $4 billion in single day on Kraft Heinz plunge. Berkshire Hathaway aka Warren Buffett owns 325 million shares of Kraft-Heinz and he may or may not buy more shares since prices are down 27%.
However, this stock is more than dead money and everyone should stay away, regardless if Wall Street tells you it’s now undervalued. Because what’s undervalued, can become more undervalued.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.